Southern California Rebound in Home Prices Continues

More good news for the local real estate markets continues to flow, as the median price paid for a Southern California home increased 1.8% in November from October to $285,000, according to MDA DataQuick, a San Diego real estate research firm. It is the 7th consecutive month in which prices have improved or held steady.Last month’s median was 43.6 percent lower than the peak Southland median of $505,000 reached during several months in early and mid 2007.

Because of a sales mix profile still tilted towards lower-cost foreclosure resales, the median’s fall from its peak overstates the decline in the value of the typical home. Generally, it appears that homes in more costly, established neighborhoods have come down in value by about half as much as homes in many newer, more affordable neighborhoods in inland growth areas.

In Los Angeles County, sales of homes have increased 24.2% compared to the comparable month last year. The median price for homes sold in November in Los Angeles County, however, remains 3.2% lower than a year ago. Mortgages above $417,000 – formerly the definition of a jumbo loan – accounted for 15 percent of all home purchase loans, roughly the same as it has been since June. Those loans made up nearly 40 percent of purchases before the August 2007 credit crunch hit.

The number of homes in foreclosure , however, continues to increase, and this may provide some downward pressure on the market next year. Much depends on the Federal governments willingness to continue to support the mortgage market’s historically low interest rates through funding provided to Fannie Mae and Freddie Mac, as well as other incentives to homeowners to buy homes.